Why That $1,150 iPhone X Price Tag Won’t Hurt Sales

October 25, 2017

2:30 pm

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If a smartphone starting at $1,000 sounds ludicrous to you, you’re probably not the target audience. And it’s a big target audience. Apple’s latest release, the iPhone X, starts at $1,000, but comes with a $150 storage upgrade, bringing the total price to $1,150 for a 256 GB phone.

Pre-orders start on Friday. Why does Apple offer such an expensive phone? Because, many note, there are several factors indicating users are willing to shell out more than anyone would pay for a low-end laptop.

Survey Results Are Strong

RBC Capital Markets conducted a survey earlier this month, finding that, of those planning to buy an iPhone X, a full 57 percent were going to go for the 256 GB upgraded version. Makes sense: If $1,000 is reasonable to you, why not add another measly $150?

More important, as the Motley Fool recently noted, is the structure of how consumers plan to pay: Through lengthy phone plans that offer a monthly cost rather than a flat one-time check.

“The industry has removed as much friction as possible, and all carriers offer installment plans that spread out the cost (and the iPhone X’s premium). For example, a $350 premium (which is the premium compared to the $650 that new iPhones used to start at) spread out over two years comes out to less than $15 per month. That’s probably not going to break anybody’s bank, and Apple knows it,” they write.

And Apple’s ace in the hole: The fact that they’re limiting the number of units they’re moving.

“Initial shipments of Apple’s highly anticipated iPhone X are expected to total around 20 million units, only half the planned amount for this year,” The Nikkei found, and they’ve added that it’s due to delays involving the Face ID feature.

If they don’t have enough supply to meet demand, they’ll boost the perceived brand power of their phone. And they’ll definitely have another 20 million units on the way for all those users dying to get rid of $1,150.

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Adam is a writer with an interest in a variety of mediums, from podcasts to comic books to video essays to novels to blogging — too many, basically. He’s based out of Seattle, and remains a staunch defender of his state’s slogan: “sayWA.” In his spare time, he recommends articles about science fiction on Twitter, @AdamRRowe